Casualty Indem. Exchange v. Penrod Bros., Inc.

• Decision Date: 02 November 1993
• Docket Number: No. 93-104,93-104
• Citation: 632 So.2d 1046
• Parties: 18 Fla. L. Weekly D2334 CASUALTY INDEMNITY EXCHANGE, Appellant, v. PENROD BROTHERS, INC., Appellee.
• Court: Florida District Court of Appeals

Page 1046

632 So.2d 1046

18 Fla. L. Weekly D2334

CASUALTY INDEMNITY EXCHANGE, Appellant, v. PENROD BROTHERS, INC., Appellee.

No. 93-104.

District Court of Appeal of Florida,

Third District.

Nov. 2, 1993.

Rehearing Denied March 22, 1994.

Powers & McNalis and Richard T. Kilgore, Lake Worth, for appellant.

Adorno & Zeder, P.A., and Raoul G. Cantero, III, and Alix J.M. Apollon, Coconut Grove, for appellee.

Before JORGENSON, LEVY and GODERICH, JJ.

JORGENSON, Judge.

Casualty Indemnity Exchange appeals from an order dismissing its complaint for subrogation. We affirm.

Penrod Brothers, Inc. leased property from Washington Harrison Properties, Inc. Pursuant to its lease, Penrod was obligated to purchase fire insurance for the leased premises. Penrod did not buy insurance, but its landlord, Washington, carried fire insurance issued by Casualty on the property. A fire on the leased premises caused $150,974.18 in insured property loss; Casualty paid that sum to the landlord, its insured. ¹

Casualty sued Penrod to recover the amount of the claim paid to the landlord pursuant to the insurance policy, alleging that Penrod's breach of the lease, namely its failure to purchase insurance, caused Casualty to become subrogated to the rights of its insured. The trial court granted Penrod's motion to dismiss; the insurer appeals.

In this case of first impression in Florida, we hold that the landlord's insurer has no right of subrogation for the tenant's breach of its contractual duty to purchase insurance. Subrogation "was designed to afford relief where one is required to pay a legal obligation which ought to have been met, either wholly or partially, by another." Underwriters at Lloyds v. City of Lauderdale Lakes, 382 So.2d 702, 704 (Fla.1980) (citations omitted). After payment of a loss to its insured, an insurer may be subrogated to "any right of action that the insured may have against the third person whose negligence or wrongful act caused the loss." Indiana Ins. Co. v. Collins, 359 So.2d 916, 917 (Fla. 3d DCA 1978) (emphasis added; citation omitted), receded from on other grounds, Holyoke Mut. Ins. Co. v. Concrete Equipment, Inc., 394 So.2d 193, 196 n. 2 (Fla. 3d DCA), rev. denied, 402 So.2d 609 (Fla.1981). In this case, Penrod did not contractually assume the risk of loss by fire; it only assumed the obligation of purchasing fire insurance. Had Penrod's lease provided that Penrod would be liable to the landlord for any loss or damage to the property insured, the insurer may have been entitled to be subrogated to the rights of the landlord under the lease. See 61 Couch on Insurance 2d Sec. 147 (Rev. Ed.1983). However, the insurer based its subrogation claim only on the tenant's failure to obtain fire insurance. Penrod's failure to purchase insurance did not cause the fire, and therefore did not cause the insurer's loss. See Patent Scaffolding Co. v. William Simpson Constr. Co., 256 Cal.App.2d 506, 64 Cal.Rptr. 187 (1967) (fire insurer that covered subcontractor's loss not entitled to be equitably subrogated to subcontractor's claim against general contractor for general contractor's failure to...